2021 Real Estate Observations (Boston, New Bedford, Fall River: unemployment rate, pool, vacations)

[maclel]

Originally Posted by WestieWhitie

Majority of the recent buyers were two income households who would not be able to swing an upper six figure mortgage on a single income and to make matters worse prices are coming down due to rapidly rising rates meaning many of them are already underwater. Have anything resembling a recession with a large number of layoffs and it will be a bloodbath.

I am not seeing SFH price declines in any of the high demand towns. Inventory continues to be anemic and things are selling very quickly with a lot of competition. Higher mortgage rates will obviously have some negative impact, but my expectation is that the impact will be more muted due 1) to lack of inventory and 2) cash buyers being so dominant, especially in the affluent towns.

On 1), I do not expect much SFH inventory improvements even in a recession as folks will be locked into their low-rate mortgages (downsizing will not free up dollars) and there has been very little new construction given lack of open space.

On 2), the affluent towns are not particularly mortgage rate sensitive. If you peruse the registries, you will see that very few buyers are taking high LTV mortgages. I think this is probably due to high competition and also big stock market gains. So far I have seen no impact in how quickly houses go pending.

[msRB311]

I am not sure I'm seeing house prices going down but in my town there isn't much on the market. April/May used to be the time to list a house...but maybe that has changed now? in 2020 it seemed like that summer/fall was insane...more houses on the market at prices I was shocked by. Perhaps more people are going to list in the summer now? It makes sense to me...listing a house and dealing with that while you have kids in school still doesn't seem ideal. Probably easier to wait for the school year to finish...however then you have to make sure everything is in place for your kid to attend school in that new town by the fall.

[massnative71]

Originally Posted by maclel

I am not seeing SFH price declines in any of the high demand towns. Inventory continues to be anemic and things are selling very quickly with a lot of competition. Higher mortgage rates will obviously have some negative impact, but my expectation is that the impact will be more muted due 1) to lack of inventory and 2) cash buyers being so dominant, especially in the affluent towns.

On 1), I do not expect much SFH inventory improvements even in a recession as folks will be locked into their low-rate mortgages (downsizing will not free up dollars) and there has been very little new construction given lack of open space.

On 2), the affluent towns are not particularly mortgage rate sensitive. If you peruse the registries, you will see that very few buyers are taking high LTV mortgages. I think this is probably due to high competition and also big stock market gains. So far I have seen no impact in how quickly houses go pending.

Who said anything about affluent towns?

[maclel]

Originally Posted by msRB311

I am not sure I'm seeing house prices going down but in my town there isn't much on the market. April/May used to be the time to list a house...but maybe that has changed now? in 2020 it seemed like that summer/fall was insane...more houses on the market at prices I was shocked by. Perhaps more people are going to list in the summer now? It makes sense to me...listing a house and dealing with that while you have kids in school still doesn't seem ideal. Probably easier to wait for the school year to finish...however then you have to make sure everything is in place for your kid to attend school in that new town by the fall.

I think COVID represented a fundamental change in the suburbs' supply picture. First and foremost, I think it has changed empty nester's perceptions of the appeal of living in an apartment in the city. A lot more of those folks are now thinking of aging in place and based on my conversations, I think that will persist for the foreseeable future. Second, the incredible rise in housing prices in the sunbelt has closed the door on a lot of migrant birds. Third, WFH and hybrid work models have taken some of toll out of the daily commute.

Reasons one and three have also caused a step function increase in demand.

[maclel]

Originally Posted by massnative71

Who said anything about affluent towns?

Originally Posted by WestieWhitie

Majority of the recent buyers were two income households who would not be able to swing an upper six figure mortgage on a single income and to make matters worse prices are coming down due to rapidly rising rates meaning many of them are already underwater. Have anything resembling a recession with a large number of layoffs and it will be a bloodbath.

What about here? I do not see any nuances that exclude affluent towns in this post.

[massnative71]

Originally Posted by maclel

What about here? I do not see any nuances that exclude affluent towns in this post.

He wasn't specifically referring to affluent towns. As we here know, "upper six figure" homes are now the norm in towns like Dedham. That is not going to last.

[WestieWhitie]

Originally Posted by massnative71

Who said anything about affluent towns?

Right - the usual W towns with generational wealth would not be affected all that much but second rate suburbs like Weymouth and Randolph with all the FOMO’d $799,000 1600sqft capes with a fresh paint job and not much else will definitely feel it.

[maclel]

Originally Posted by massnative71

He wasn't specifically referring to affluent towns. As we here know, "upper six figure" homes are now the norm in towns like Dedham. That is not going to last.

He wasn't specifically referring to any towns!!

[massnative71]

Originally Posted by maclel

He wasn't specifically referring to any towns!!

No, he wasn't. I'm just saying that your post is irrelevant to what he was saying, because it only applies to certain towns that have some "immunity" from rising mortgage rates. And you are correct about those places, but they are in the minority.

[maclel]

Originally Posted by massnative71

No, he wasn't. I'm just saying that your post is irrelevant to what he was saying, because it only applies to certain towns that have some "immunity" from rising mortgage rates. And you are correct about those places, but they are in the minority.

You are wrong on that. First, my post is relevant to a big swath of the Greater Boston area. There are a lot of affluent towns. Second, while there are fewer cash buyers in the less affluent towns, there are still a lot more than there used to be, and more importantly, reason 1) still holds. Supply is going to remain constrained because many folks are going to be dissuaded from moving if they cannot get a comparable mortgage rate.